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By Jonathan Stempel

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NEW YORK (Reuters) - The U.S. government said Coffer of America Corp's bid to bandy out a board adjudication award it accountable for the auction of ambiguous loans to Fannie Mae and Freddie Mac afore the banking crisis, which led to a $1.27 billion penalty, defies accepted faculty and should be rejected.

In a cloister filing on Thursday night, the U.S. Department of Justice said affirmation at balloon showed the bank's Countrywide assemblage aria to the government-controlled mortgage companies about the affection of loans actuality sold, as Countrywide emphasized acceleration and aggregate at the amount of quality.

It additionally accused Rebecca Mairone, a above Countrywide official aggravating to about-face a accountability adjudication adjoin her, of aggravating to abstruse affirmation that showed she knew the loans were suspect, but awash them anyway.

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U.S. District Judge Jed Rakoff in Manhattan imposed a $1.27 billion civilian amends adjoin the second-largest U.S. coffer in July, nine months afterwards the board verdict. He additionally ordered Mairone, the alone alone charged, to pay $1 million.

Arguments by the defendants "defy the evidence, the law, and accepted sense," the government said. "Evidence of defendants' artifice was abundant."

The accusation centered on Countrywide's "High Acceleration Swim Lane" program, additionally alleged HSSL or Hustle, which scrapped procedures to edger out bad loans and adored agents based on volume. It was created afore Coffer of America bought Countrywide in July 2008.

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The payout by Coffer of America is not covered by the Charlotte, North Carolina-based lender's $16.65 billion mortgage adjustment aftermost ages with federal and accompaniment authorities.

Bank of America agent Lawrence Grayson beneath to animadversion on the government's filing, while Mairone's advocate Marc Mukasey alone its premise.

"The government gets it amiss appropriate from the get-go," Mukasey said in an email. "There was no affidavit that Rebecca knew alike a distinct accommodation was not of advance affection nor that she awash any loans alive as much. Their connected scapegoating of her is abundant handed and frankly, nasty."

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The case is U.S. ex rel O'Donnell v. Coffer of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422.

(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)


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